PRO-DEX, INC.
1994 SECOND AMENDED STOCK OPTION PLAN
This Second Amended Stock Option Plan (the “Plan”),
adopted in consideration for services rendered and to be rendered
to Pro-Dex, Inc. and related companies, is amended this 4th day of
December, 2007.
1. Definitions . The terms used in this
Plan shall, unless otherwise indicated or required by the
particular context, have the following meanings:
Board : The Board of Directors of
Pro-Dex, Inc.
Code : The Internal Revenue Code of
1986, as amended.
Common Stock : The no par value common
stock of Pro-Dex, Inc.
Company :
Pro-Dex, Inc., a corporation incorporated under the laws of
California, and any successors in interest by merger, operation of
law, assignment or purchase of all or substantially all of the
property, assets or business of the Company.
Date of Grant : The date on which an
Option (see below) is granted under the Plan.
Disinterested Person : A director who has not been
granted or awarded equity securities pursuant to any plan of the
Company or of any Related Company of the Company during one year
prior to that director’s service as an administrator of the
Plan, except as otherwise provided in Rule 16b-3 promulgated under
the Securities Exchange Act of 1934, as amended (the
“Exchange Act”) with respect to (a) participation in
formula plans or ongoing securities acquisitions plans, and (b) an
election to receive securities for an annual retainer fee.
Employee : An Employee is an employee of
the Company or any Related Company.
Fair Market Value : The Fair Market Value of the
Option Shares. Such Fair Market Value as of any date shall be
determined by the Option Committee as of the last business day for
which the prices or quotes discussed in this sentence are available
prior to the date an Option is granted and shall mean (a) the
average (on that date) of the high and low prices of the Common
Stock on the principal national securities exchange by which the
Common Stock is traded, if the stock is then traded on a national
securities exchange; or, (b) the last reported sale price (on that
date) of the Common Stock on NASDAQ or other securities market, if
the stock is not then traded on a national securities exchange; or
(c) the closing bid price (or average of bid prices) last quoted
(on that date) by an established securities market or quotation
service for over-the-counter securities, if the last sale price is
not reported for the stock on the service or market on which the
stock is quoted. However, if the Common Stock is not
publicly-traded at the time an Option is granted under the Plan,
Fair Market Value shall be deemed to be the fair value of the stock
as determined in good faith by the Board or the Option Committee,
and a written record of the method of determining such value shall
be maintained. Such valuation shall take into account all
available information material to the value of the company,
including but not limited to the value of the tangible and
intangible assets of the company, the present value of its
anticipated future cash flows, the market value of the stock or
equity interests in other entities engaged in substantially the
same business, recent arm’s length transactions involving the
sale of such stock, and other relevant factors.
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Incentive Stock Options (“ISOs”):
“Incentive Stock Options” as that term is defined in
Section 422A of the Code.
Key Employee : A person designated
by the Option Committee who either is employed by the Company or a
Related Company (see below) and upon whose judgment, initiative and
efforts the Company or a Related Company is largely dependent for
the successful conduct of its business; provided, however, that Key
Employees shall not include those members of the Board who are not
employees of the Company or a Related Company.
Non-Incentive Stock Options (“Non-ISOs”
): Options which are not intended to
qualify as “Incentive Stock Options” under Section 422A
of the Code.
Option : The rights granted to an
Employee to purchase Common Stock pursuant to the terms and
conditions of an Option Agreement (see below).
Option Agreement : The written
agreement (and any amendment or supplement thereto) between the
Company and an Employee designating the terms and conditions of an
Option.
Option Committee : With respect to
grants of Options to Employees who are not also Officers and/or
Directors of the Company, the Plan shall be administered by an
Option Committee (“Option Committee”) composed of the
Board or at least two members of the Board. With respect to
grants of Options to Employees who are also Officers or Directors,
the Plan shall be administered by a committee, selected by the
Board, consisting of two or more persons, each of whom is a
Disinterested Person. Such committee may also be deemed an
Option Committee.
Option Shares : The shares of Common
Stock underlying an Option granted to an Employee.
Optionee : An Employee who has been
granted an Option.
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Related Company : Any corporation
that is a “parent corporation” or a “subsidiary
corporation” with respect to the Company, as those terms are
defined in Section 425 of the Code. The determination of
whether a corporation is a Related Company shall be made without
regard to whether the corporation or the relationship between the
corporation and the Company now exists or comes into existence
hereinafter.
2. Purpose and Scope .
(a) The purpose of this Plan is to advance the
interests of the Company and its shareholders by affording
Employees an opportunity for investment in the Company and the
incentive advantages inherent in stock ownership in this
Company.
(b) This Plan authorizes the Option Committee to
grant Options to purchase shares of Common Stock to Employees
selected by the Option Committee while considering criteria such as
employment position or other relationship with the Company, duties
and responsibilities, ability, productivity, length of service or
association, morale, interest in the Company, recommendations by
supervisors, and other matters.
3. Administration of the
Plan . The Plan shall be administered by the
OptionCommittee. The Option Committee shall have the
authority granted to it under this section and under each other
section of the Plan.
In accordance with and subject to the provisions of the Plan, the
OptionCommittee shall select the Optionees, shall determine (a) the
number of shares of Common Stock to be subject to each Option,
which number shall be fixed as of the date of grant, (b) the time
at which each Option is to be granted, (c) whether an Option shall
be granted in exchange for the cancellation and termination of a
previously granted option or options under the Plan or otherwise,
(d) the purchase price for the Option Shares, which price shall not
be less than 100% of the per share Fair Market Value of the shares
on the date of grant, (e) the option period, and (f) the manner in
which the Option becomes exercisable. In addition, the Option
Committee shall fix such other terms of each Option as the Option
Committee may deem necessary or desirable. The Option
Committee shall determine the form of Option Agreement to evidence
each Option.
The Option Committee from time to time may adopt such rules and
regulations for carrying out the purposes of the Plan as it may
deem proper and in the best interests of the Company. The
Option Committee shall keep minutes of its meetings and those
minutes shall be distributed to every member of the Board.
The Board may from time to time make such changes in and additions
to the Plan as it may deem proper and in the best interest of the
Company; provided, however, that no such change or addition shall
impair any Option previously granted under the Plan, and that the
approval by the affirmative vote of the holders of a majority of
the Company's securities entitled to vote and represented at a
meeting duly held in accordance with the applicable laws of the
State of California, shall be required for any amendment which
would:
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(a) modify the
eligibility requirements for receiving Options under the Plan;
(b) increase the benefits
accruing to Employees under the Plan; or
(c) increase the number
of shares of Common Stock that may be issued under the Plan.
All actions taken and all interpretations and determinations made
by the Option Committee in good faith (including determinations of
Fair Market Value) shall be final and binding upon all Employees,
the Company and all other interested persons. No member of
the Option Committee shall be personally liable for any action,
determination or interpretation made in good faith with respect to
the Plan, and all members of the Option Committee shall, in
addition to rights they may have as Directors of the Company be
fully protected by the Company with respect to any such action,
determination or interpretation.
4. Number of Shares .
The Board is authorized to appropriate, issue and sell for the
purposes of the Plan, and the Option Committee is authorized to
grant Options with respect to, a total number, not in excess of
1,500,000 shares of Common Stock, either treasury or authorized but
unissued, or the number and kind of shares of stock or other
securities which in accordance with Section 9 shall be substituted
for the 1,500,000 shares or into which such 1,500,000 shares shall
be adjusted. All or any unsold shares subject to an Option
that for any reason expires or otherwise terminates, may again be
made subject to Options under the Plan.
5. Eligibility . Options
which are intended to qualify as ISOs will be granted only to Key
Employees. Key Employees and other Employees may hold more
than one Option under the Plan and may hold Options under the Plan
and options granted pursuant to other plans or otherwise.
6. Option Price . The
Option Committee shall determine the purchase price for the Options
Shares, provided that the purchase price to be paid by Optionees
for the Option Shares shall not be less than 100 percent of the
Fair Market Value of the Option Shares at the time the Option is
granted. The purchase price for the Option Shares shall be a
fixed, and cannot be a fluctuating, price.
7. Duration and Exercise of
Options .
(a) Each Option granted under the
Plan shall be exercisable on such date or dates and during such
period and for such number of shares as shall be determined
pursuant to the provisions of the instrument evidencing such
Option. The Option Committee shall have the right to
accelerate the date of exercise of any Option, provided that the
Option Committee shall not accelerate the exercise of any ISO
granted if such acceleration would violate the annual vesting
limitation contained in Section 422(d) (1) of the Code. The
Option Committee shall not amend or extend any Award in such a way
as might, under the Regulations promulgated under Section 409A of
the Code, provide for the additional deferral of compensation or an
effective decrease in the exercise price of the Award to a price
below what was the Fair Market Value of the Common Stock on the
date of grant.
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(b) Except as otherwise
permitted under Section 11, during the lifetime of the Optionee,
the Option shall be exercisable only by the Optionee; provided,
that in the event of the legal disability of an O
